"We have distributed the plan to the donors and they have welcomed it," PA Planning Minister Ali al-Jarbawi said.

The plan will be presented formally to donor countries at a pledging conference in June, he said.

Palestinian leaders plan to ask the United Nations General Assembly in September to recognize a Palestinian state in all the lands Israel occupied in 1967. Israel warns unilateral moves cannot replace negotiated peace but the Palestinians say nearly two decades of talks have failed to give them a state.

The United Nations, the World Bank and the International Monetary Fund have praised Fayyad's drive over the past two years to establish the institutions and attributes of a modern state in time for the General Assembly meeting in September.

"The journey has been long and arduous, but the end is now in sight. We are now in home stretch to freedom," Fayyad says in the introduction to the plan. "Now it is time for us to be the masters of our own destiny in a state of our own."

The plan says "the next three years will witness a transformation in the nature of external aid from 'life support' to real investment in the future of Palestine".

It calls for an economy led by the private sector, reducing government's recurrent expenditure while increasing development spending.

It says GDP growth is expected to reach nine percent this year, rising
to 10 percent in 2012 and 12 percent in 2013. Unemployment is projected
to decline from 25 percent in 2009 to 15 percent in 2013.

The fiscal framework projects 16 percent annualized growth in revenue
over the three years, with total net revenues exceeding $2 billion in
2011 and well above $3 billion in 2013, due to an increase in tax
revenues.

But donor states which have given billions in aid to the Palestinians
over the years will need no reminder that Israeli control of 60 percent
of the West Bank constitutes a major barrier to the full development of
its economic potential.

The development plan's inclusion of the Gaza Strip ignores the fact that it is currently under the control of Hamas.

"Development of vast areas of West Bank land, isolated and damaged by
the occupation, will also require sustained effort and investment for
many years to come," the plan says.